Opaud 1

• 1. The primary stakeholders are A. Customers B. Shareholders C. Lenders D. Employee union

  B. Shareholders
• The goal of corporate governance and business ethics education is to:

  • A.Teach students their professional accountability and to uphold their personal integrity to society.
  • B. Change the way in which ethics is taught to students,
  • C. Create more ethics standards by which corporate professionals must operate.
  • D. Increase the workload for accounting students.

  C. Create more ethics standards by which corporate professionals must operate
• 3. The corporate governance structure of a company reflects the individual companies':

  • A.Cultural and economic system.
  • B. Legal and business system.
  • C. Social and regulatory system.
  • D. All of the above.

  D. All of the above.
• 4. The internal audit function is least effective when the department:

  • A.Is non-independent.
  • B. Is competent.
  • C. Is objective.
  • D. Exhibits integrity.
  • A.Is non-independent.
• 5. Under the_____, both internal and external corporate governance mechanisms are intended to induce managerial actions that maximize profit and shareholder value.

  • A.Shareholder theory.
  • B. Agency theory,
  • C. Stakeholder theory.
  • D. Corporate Governance theory
  • A.Shareholder theory.
• 6. An organization's appropriate tone at the top promoting ethical conduct is an example of:

  • A.Ethics sensitivity.
  • B. Ethics incentives.
  • C. Ethical behavior.
  • D. Consequentialis
  • C. Ethical behavior.
• An independent director is one who:

  • A.Did not attend a school supported by the company.
  • B. Does not have outside relationships with other directors.
  • C. Does not have any other relationships with the company other than his or her directorship.
  • D. All of the above.

  C. Does not have any other relationships with the company other than his or her directorship.
• 8. The chairperson of the board of directors and CEO should be leaders with:

  • A.Vision and problem-solving skills.
  • B. The ability to motivate.
  • C. Business acumen.
  • D. All of the above


  D. All of the above
• 9. The first step in the auditing process should be to secure the commitment of:

  • A.employees.
  • B. top executives and directors.
  • C. stockholders.
  • D. customers.

  B. top executives and directors
• 10. Which of the following regarding agency theory is correct?

  • A.Agency theory only applies to large entities.
  • B. Agents act in the best interest of the principal.
  • C. Agents are assumed to be in a position of power.
  • D. Agency theory defines the relationship between agents and directors

  B. Agents act in the best interest of the principal.
• 11. Where in the annual report would you expect to find mandatory social and environmental reporting?

  • A.The financial statements and the chairman's report.
  • B. Notes to the financial statements and directors' report.
  • C. Corporate governance information and the auditor's report.
  • D. The Directors' declaration and the Chief Executive Officer's report.

  B. Notes to the financial statements and directors' report.
• 12. Which of the following descriptions applicable to different types of directors and their independence

  is incorrect?

  • A.Independent executive director.
  • B. Independent non-executive director.
  • C. Non-independent executive director.
  • D. Non-independent non-executive director.

  A.Independent executive director.
• 13. Which of the following is not an example of a duty or responsibility of directors?

  • A.Having a conflict of interest but declaring it to the board of
  • B. continuing to transact with creditors when the company's liabilities exceed the assets.
  • C. Researching and asking questions relating to the company's operations so as to be informed.
  • D. Choosing to personally carry out instructions from the board rather than requesting subordinates to

  do so.

  • B. continuing to transact with creditors when the company's liabilities exceed the assets.
• 14. Which of the following is not one the underlying principles of the corporate governance Combined  Code of Practice?

  • A.Openness
  • B. Integrity
  • C. Accountability
  • D. Acceptability
  • D. Acceptability
• A (n)_____ is a problem, situation, or opportunity requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong.

  • A.crisis
  • B. ethical issue
  • C. indictment
  • D. fraud
  • B. ethical issue
• A stakeholder orientation includes all of the following activities except:

  • A.generating data about stakeholder groups.
  • B. assessing the firm's effects on stakeholder groups.
  • C. distributing stakeholder information throughout the firm.
  • D. minimizing the influence of stakeholder information on the firm.

  • D. minimizing the influence of stakeholder information on the firm.
• 17. JOY Ltd is a mining company listed on the American stock exchange. which of the following would most likely be  the best candidate for appointment?

  • A.An independent non-executive director with a qualification in finance.
  • B. An executive director with a qualification in accounting.
  • C. A non-independent non -executive director with qualifications in accounting and auditing.
  • D. A non-executive director who was previously the CFO of JOY Ltd a year ago.


  a.An independent non-executive director with a qualification in finance.
• 18. An organization's obligation to act to protect and improve society's welfare as well as its own interests is referred to as

  • A.organizational social responsibility.
  • B. organizational social responsiveness.
  • C. corporate obligation.
  • D. business ethics.
  • A.organizational social responsibility.
• 19. Which of the following regarding corporate governance is correct?

  • A.Corporate governance can temper growth.
  • B. Good corporate governance can result in excessive risk-taking.
  • C. Corporate governance often results in prompt and effective decision-making.
  • D. The aim of corporate governance is to protect the interests of shareholders and the local economies.
  • C. Corporate governance often results in prompt and effective decision-making.
• 20. Code of conduct and code of ethics

  • A.are formal statements that describe what an organization expects of its employees.
  • B. become necessary only after a company has been in legal trouble.
  • C. are designed for top executives and managers, not regular employees.
  • D. rarely become an effective component of the ethics and compliance program.
  • A.are formal statements that describe what an organization expects of its employees.
• 21. Consider the following recommendations:

  a minimum of three members, chaired by an independent director...In terms of the CG Principles, the above requirements relate to the composition of which committees?

  • A.The nomination and risk committees.
  • B. The audit and remuneration committees.
  • C. The remuneration, audit, risk and nomination committees.
  • D. The remuneration, risk and nomination committees but not the audit committee.
  • D. The remuneration, risk and nomination committees but not the audit committee.
• 22. In terms of the CG Principles, which of the following regarding the composition of the nomination committee of a listed company is most correct?

  • A.minimum of three members chaired by an executive director.
  • B. A majority of independent directors chaired by an independent director.
  • C. A majority of three members of whom most are independent directors.
  • D. A minimum of one independent director who also chairs the committee.


  B. A majority of independent directors chaired by an independent director.
• 23. Most companies begin the process of establishing organizational ethics programs by developing:

  • A.ethics training programs.
  • B. code of conduct.
  • C. ethics enforcement mechanisms.
  • D. hidden agendas.
  • B. code of conduct.
• 24. Stakeholders are considered more important to an organization when:

  • A.they can make use of their power on the organization.
  • B. they do not emphasize the urgency of their issues.
  • C. their issues are not legitimate.
  • D. they can express themselves articulately.
  • A.they can make use of their power on the organization.
• 25. The four types of social responsibility include:

  • A.legal, philanthropic, economic, and ethical.
  • B. ethical, moral, social, and economic.
  • C. philanthropic, justice, economic, and ethical.
  • D. legal, moral, ethical, and economic.
  • A.legal, philanthropic, economic, and ethical.
• 26. To be successful, business ethics training programs need to:

  • A.focus on personal opinions of employees.
  • B. be limited to upper executives.
  • C. educate employees on formal ethical frameworks and models of ethical decision making.
  • D. promote the use of emotions in making tough ethical decisions.

  • C. educate employees on formal ethical frameworks and models of ethical decision making.
• 27. Which of the following regarding agency theory is correct?

  • A.Agency theory only applies to large entities.
  • B. Agents act in the best interest of the principal.
  • C. Agents are assumed to be in a position of power.
  • D. Agency theory defines the relationship between agents and directors.

  • B. Agents act in the best interest of the principal.
• 28. Which of the following is NOT one of the primary elements of a strong organizational compliance

  program?

  • A.written code of conduct
  • B. An ethics officer
  • C. Significant financial expenditures
  • D. A formal ethics training program
  • C. Significant financial expenditures
• 29. Related-party transactions may consist of

  • A.Managers becoming entrenched.
  • B. Tunnelling and transfer pricing.
  • C. Transactions between shareholders of the same political persuasion.
  • D. None of the above.
  • B. Tunnelling and transfer pricing.
• • 30. The following are the principles of IA's Code of Ethics except:
  • A.Integrity
  • B. Confidentiality
  • C. Professional Competence and Due Care
  • D. Objectivity
  • C. Professional Competence and Due Care